By Paul Bean
The Clean Heat Standard is “theoretically workable” but “not well suited” to Vermont, the Public Utilities Commission told the House and Senate Energy Committees in a joint hearing this morning.
Last night at 11:48 PM, the PUC released their report on the CHS saying, “Given the efforts expanded, the Commission does not take lightly its conclusion that the Clean Heat Standard is not well suited to Vermont.”
“It’s difficult to explain the Clean Heat Standard,” said Ed McNamara, PUC commissioner, explaining the challenge the PUC faced in trying to inform potential obligated parties what they are required to do. “Not only do we not have enough information and we don’t really have great means to make it accurate. The heating market is incredibly complex, especially for the definition of obligated parties… determining the obligated parties is going to be challenging.”
McNamara explained the way the law stands now, theoretically if you buy a propane canister for camping in New Hampshire, and you use it partially in New Hampshire, and partially in Vermont you are technically an “obligated party” as defined by current statute and that was just clearly not the intention of the proposal.
McNamara said the PUC is still not yet able to provide information on the potential costs of the CHS on “participants,” the people actually having electric heat pumps installed and weatherizing their homes. “So we have one side of the equation that is short on numbers,” he explained, “The program costs alone are $956 million over ten years,” said McNamara, “and that equates to, this is just for fuel oil, about 8 cents in 2026 increasing to 58 cents in 2035. That represents a 2% rate increase in 2026, increasing to about 45% in 2035.”
These program costs will cover the administration of the Clean Heat Standard implementation. Costs incurred by fuel oil dealers and customers will be extra and as of yet are undetermined.
“It’s not a fundamentally wrong program, we just don’t think it’s a good fit for Vermont”, said Commissioner McNamara, who stated very clearly that he was a lawyer and not an economist.
“If you have oil or propane you are likely to save money if you install a heat pump… so you have the value of the reduced fuel costs. You also have the social value of reduced greenhouse gas emissions… the total of those numbers is $ 1.5 billion.”
That notion had this reporter scratching his head trying to figure out where they got that $1.5 billion dollars in value created – and still have not determined the total cost.
I was not alone. Senator Scott Beck later asked, “I think you mentioned a social value of $1.5 billion, what would be an example of a social value?”
“1.5 billion actually has two different components, one is the reduced fuel cost,” explained McNamara, who did say he was getting over his head on this… “that just reflects the fact that as people put in heat pumps, if you currently have oil or propane you’re likely to save money by putting in a heat pump. Part of that $1.5 billion reflects savings for Vermonters…The other component is called the social cost of carbon, and it is a way to reflect that there is societal value in reducing carbon emissions.… assuming that we meet all our GHG reduction requirements, there’s going to be less damage, less significant storms, things like that.”
“We agree with the PUC’s conclusion, that the CHS and Act 18 are overly and unnecessarily complicated and costly,” writes Annette Smith with Vermonters for a Clean Environment in an email blast with the latest report from the PUC. “The Global Warming Solutions Act, Climate Council and Clean Heat Standard are taking their collective toll on state agencies, including the PUC, Department of Public Service and Agency of Natural Resources,” writes Smith.